Referrals are the most valuable leads you can get.
They’re better qualified leads than you get from other sources.
Think about it. If someone asks a friend for a recommendation, it’s because they are serious about buying something.
Also, they’re more likely to trust you. They’ve already heard good things from someone they trust. That carries a lot of weight.
So why do so many businesses fail to get as much business as they could from referrals?
I’ve found that there are four common myths about referral marketing that get in the way.
Let’s bust them.
Myth #1: Customers don’t want to give referrals
The truth is people do want to give referrals. Giving referrals to their friends and colleagues lets them be helpful to others. It also lets them feel authoritative. Being able to say “I’ve got a guy (or girl)…” is a way people can feel valuable.
If your customers aren’t referring you, a few things could be happening.
You didn’t ask. There are people out there who will go out of their way to recommend businesses they like. There are many more who would refer someone if they were thinking about it. The truth is most of your customers are not thinking about your business most the time.
So start asking.
If you asked and they said no, you need to do some investigating.
Maybe that person just isn’t the type to recommend things to their friends.
Maybe they don’t have any friends.
It could happen.
It’s more likely that your service isn’t deserving of a referral. No one wants to recommend someone or something and have it turn out badly. So, if they aren’t thrilled with what you do for them, they aren’t going to make a referral.
Take an honest look at how you have (or have not) delivered for that customer.
Fix the problems you find.
Myth #2: You can’t control referral business
You do have less control over the timing and number of referrals compared to other forms of lead generation. But you can influence how much referral business you get.
If you are doing a good job, a certain number of referrals will always come in organically.
Just like any other marketing campaign you might do, you can run campaigns with the specific goal of getting referrals. If the campaign is effective, you will see an uptick in your referral business.
Check out this post for some tips about how to create an effective marketing message.
Some ideas for a referral campaign include:
- Send a message to current customers asking for referrals
- Hold a “bring a friend” event
- Offer a new customer special if they provide the name of the person who referred them
The one thing I wouldn’t suggest is offering an incentive for providing a referral. You will get customers giving you bad referrals just to get the offer. A version of the new customer special where both the new customer and the referrer get something could work, though.
Myth #3: I’m too busy and already spend too much on advertising and sales
The reality is that referral marketing is a low-cost way to get quality leads.
Provide quality service and ask for the referral when you are with the customer. This costs literally nothing. The only thing you have to do is add one more sentence to what you say to customers. The sentence where you ask for a referral.
Combine the low cost of asking for referrals with the higher conversion rate you will get from them, and you end up with ROI that is off the charts.
The question here isn’t “how can I afford to?” It’s “how can I afford not to?”
Myth #4: I should treat referred leads just like any other lead
No, you shouldn’t.
A referral isn’t some random person that just showed up. While it may be someone you’ve never seen before, they will feel like they already have a relationship with you.
If they sought out a recommendation, they are probably more likely to buy than the average lead. A lead with a high probability of closing is a great reason to treat them better than a random lead.
Their friend shared their experiences with you when they recommended you. So they already have positive feelings toward your business and feel like they know a bit about you. They also have expectations of a similar experience. Anything less will leave them disappointed.
Also, you can be sure that whatever experience the referral has with you will get back to the person who referred them. If that experience isn’t great, you have a lot more to lose than just one prospect’s business.
Do you think that customer will ever refer anyone to you again if you don’t take care of the people they send you? Wave goodbye to a steady stream of new customers who would have cost you nothing to attract.
Remember, people make referrals to feel important and needed. If the one they make to you goes badly, it will embarrass or anger them. At a minimum, it will damage your relationship with that person. It could even cost you a customer.
Referral marketing is a long-term strategy. It takes time to build enough trust with your customers for them to refer you. The more sensitive or personal your service is, the longer it will take to build up that trust.
So get started!
Here’s the good news. Building that trust doesn’t require you to do anything other than you would have without a referral marketing effort. All you need to do is provide a great experience and great results for your customers. Then ask for referrals.
Don’t forget this. To be successful, the order of those two things I just mentioned matters. A lot.
Do you have a great referral marketing success story? Lets hear it.